SUMMARY OF RSI STAFF VIEWS REGARDING THE
PROBLEM OF LEAKAGE" FROM WORLD BANK PROJECT BUDGETS

(Emphasis Added)

(The following summarises informal discussions
with RSI operations staff, confidential inputs from a small number
of contractors and consultants, and the views of the RSI Working
Team of experienced project officers; this does not presume to
represent the results of a rigorous analysis, rather it is an
operational overview of the problem.)

Any review of the problems of budget "leakage"
from Bank projects must begin with two unequivocal statements
of fact:

1. Documentation of procurement, implementation,
disbursement and audits for Bank-financed projects are generally
complete and conform to all Bank requirements; we have moved aggressively
to resolve each and every irregularity for which we have documents
(as well as many cases of preventive action and informal corrections
of problems).

2. Bank staff members have not been implicated
in any form of misconduct; the Bank, is widely regarded as one
of the few "uncorruptable" institutions in the Indonesian
development process, but many of our staff (particularly HQ TMs)
are viewed as ignorant or uncaring (as in "they don't really
want to know") of local practices and thus subject to being
misled or deceived rather easily. However, even with these facts
established, our projects are being implemented in an administrative
culture which is not just tolerant of collusion and diversion
of funds, but which blatantly expects civil servants to supplement
their incomes by such means; Bank projects are not immune to these
practices. One of the difficulties in attempting an analysis of
the nature and magnitude of such diversions is the wide range
of variation in operational methods among GOI organizations. As
described in the accompanying note on "Typology of Informal
Payments in GOI Development Projects" (perhaps to be retitled:
"A Guide to GOI Worst Practice" ), there are a variety
of techniques commonly used, but with very different amounts and
percentage diversions, by the project officers of GOI agencies.
In aggregrate we estimate that at least 20-30 per cent of GOI
development budget funds are diverted through informal payments
to GOI staff and politicians, and there is no basis to claim a
smaller "leakage" for Bank projects as our controls
have little practical effect on the methods generally used.

BACKGROUND

To establish appropriate cultural context for
the description of GOI practices, two fundamental facts of Javanese
life must be understood: (1) the Javanese social order is extraordinarily
hierarchical, requiring respect and deference to those holding
higher positions; and, (2) dating from the colonial era, civil
servants are paid in two separate components, a base salary and
allowances (usually rice, transport, etc) package, which is only
minimally sufficient to cover subsistence requirements, is paid
to each employee for simply reporting for duty; any significant
task assigned is expected to be renumerated with a separate honorarium
or project bonus, which officially is to be budgeted as administrative
overhead in each project budget request, but this is not regularly
provided, leaving nearly all civil servants in constant search
of supplemental income. A common slang expression classifies civil
services positions as being "wet" or "dry"
depending on the relative accessability of supplemental income.
Those assigned to "dry" positions frequently spend most
of their days in other forms of employment of all types (eg an
engineer might "moonlight" for a private developer,
an office boy may work as a private courier, etc). These practices
represent a significant loss to GOI in terms of administrative
capacity and efficiency, but are not classified as "leakage"
per se.

It must also be understood that the GOI officials
occupying "wet" positions, ie responsible for administration
of development projects or in other positions of significant responsibility,
are faced with expectations of income assistance from both higher
and lower officials within their work unit. The distribution of
diverted funds thus becomes a quite elaborate system in many agencies.
Unlike corrupt practices in many other developing counties, the
GOI system still expects an acceptable project outcome/result
and peer pressures and scrutiny by others in the system tend to
limit incomes. (Particularly in recent years, the same cannot
be said of higher levels of the structure, and there are serious
concerns about the recent erosion of the expectations of quality
results.) Another variable in the system is the fact that some
GOI officials have been expected to pay for their appointments
to "wet" positions (this is frequently reported to be
the case in provincial and local governments; eg the price of
appointment as Mayor of a major city is said to range from Rp
1-5 billion), thus some of the diversion must be regarded as a
form of cost recovery! The demands of the ruling political faction
GOLKAR on their core membership of civil servants in "wet"
positions has frequently been cited as a key determinant of leakage,
especially during the past two years ahead of the May 1997 elections.
Of course, there is an element of simple greed in all parts of
the system as well, but it is extremely difficult to determine
if a seemingly greedy demand by a senior official is inappropriate
or simply a pass-through demand from an even higher level. It
is clear that the accumulation of such demands weighs most heavily
on projects executed at local government level, where GOI controls
are weakest and staff are least willing to question instructions
of superiors.

On a more positive note, in those implementing
agencies where professional competence and compensation have been
improved substantially, and where adequate project management
expenses have been brought on budget, the demands for diversion
of funds seem to have been quite significantly reduced (eg PLN,
Telecoms, PGN, and our Health project offices wherein the Bank
is financing salary top-ups and other expenses). The primary distortion
in these agencies appears to center on firms owned or controlled
by senior government officers or their family members seeking
to subvert the established procurement processes for major contracts.
Of course, it must also be noted that in such large-budget operations
( MPW, PLN and Telecoms particularly) even relatively small percentage
diversions can total huge sums, but we see no clear pattern of
diversion.

While we regard the accompanying "typology"
paper as broadly indicative of the patterns and magnitudes of
institutionalized diversions of the GOI development budget, the
Working Group wishes to illustrate with the foregoing paragraphs
the complexity and variability in the patterns of diversion which
have to date frustrated any attempt to more precisely quantify
or analyse the problem. There are significantly diverging opinions
regarding the potential value of attempting to conduct "representive"
sampling of projects or contracts, with some members strongly
supportive and others feeling it would provide little more than
an expanded group of anecdotal cases, but all recognize the difficulty
of defining a truly representative subset within the Bank's portfolio.
We would welcome the opportunity to discuss this further with
you. In addition to the typology/summary, we are also forwarding
notes from our Working Team members with the request that they
be "for your eyes only". Your request for some examples
of Bank projects impacted by these practices is partially fulfilled
by these papers; I will prepare a more concise note summarizing
the examples if you wish. We will also revise the previous draft
note regarding recommended improvements to our procurement processes,
and supplement this with other recommended actions to be undertaken
by the Bank in cooperation with GOI. The Team would also like
the opportunity to meet with you at your earliest convenience
to discuss your reaction to this material, next steps and/or additional
material you wish us to generate.

GOI DEVELOPMENT BUDGET
"LEAKAGE"

Process/Problem Description

All GOI agency budgets are prepared in two parts:
(i) routine costs of personnel base, office operations, etc. and
(ii) development projects budget including implementation overheads
for project design, supervision, etc. However, from the earliest
days of the New Order government to the present, the budgets contain
only subsistence-level wages for civil servants and grossly inadequate
operations and implementation overheads to allow public announcement
of inflated figure for development projects investment.

The compensation system for civil servants predates
GOI, having been established during the colonial period. Each
public employee is paid a subsistence package of base salary plus
allowances (typically rice, transport, etc) from the routine budget,
in what may be characterized as a "retainer" for reporting
to his/her duty station, then task honoraria or position allowances
are to be paid to compensate each employee for work actually performed.
The GOI administrative tradition of under-budgeting and/or diverting
funds for these supplemental compensation payments leaves essentially
all six million civil servants being officially compensated at
subsistence level only, with the clear expectation that they will
find or create means for supplementing their income. In popular
slang, GOI agency positions are classified as "wet"
or "dry" based on the relative accessibility of additional
income. However, it is a common expectation that persons assigned
to "dry" positions will supplement their income (with
part-time employment or other activities). The GOI budget process
thus assumes the continuation of funds diversion practices.

Most GOI agencies have sophisticated informal
systems for diversion of 10-20 per cent of the development budget
under their management and for utilizing the proceeds diverted
to supplement both their inadequate operations funds and their
compensation. These arrangements vary widely among GOI agencies,
but almost universally depend on the payment of percentage or
lump-sum rebates or "kick-backs" by contractors implementing
projects from the agency development budget. Such payments are
informal but regarded as an overhead or informal "tax"
by most firms doing business with GOI, and are typically included
in the unit prices or inflated bills of quantity for the contract.
Most GOI agencies demand that quality of project outputs be maintained,
although there is concern that attention to quality is being eroded
by increasing greed of some managers. The percentage diverted
by local government agencies is typically somewhat higher due
to generally smaller contract size, as well as additional demand
for sharing the proceeds (eg often the local military command
and/or provincial officials will seek shares). It is difficult
to classify this widespread practice as "corruption"
in the normal meaning of the word, and there is an important distinction
to be drawn between this established process and those cases of
embezzlement, fraud, collusion and misappropriation for personal
enrichment which constitute actions more typically defined as
"corruption". It is suggested that for discussion purposes
the budget manipulations be referenced as "systemic diversions",
while the non-systemic cases be termed "project diversions"
or "criminal activity"; clearly, both types of diversions
must be addressed, but differently.

TYPOLOGY OF INFORMAL PAYMENTS IN GOI DEVELOPMENT
PROJECTS (INCLUDING WORLD BANK FUNDED INVESTMENTS)

(This listing is indicative only, as all parties
contributing to this summary have stressed the wide variation
in types and amounts for individual projects and implementing
units.)

Pre-Project Expenses (5-10 per cent or more
of project budget):

 Payment by project sponsor to BAPPENAS
for budget allocation (3-5 per cent or more? Local government
project agencies must also pay local and provincial BAPPEDA similar
percentage).

 For donor-assisted projects, payment
by project sponsor to BAPPENAS for Blue Book listing (1-2 per
cent for listing, more if donor commits financing)

 Payment by project sponsor to MoF
for budget (DIP) release; local governments pay @ for release
of INPRES, SPABP,etc. and MoF for subsidiary loans (1-2 per cent
or more?) Land Aquisition and Resettlement Costs (extremely variable,
but generally "wet"

 Numerous reports of diversion of
50-80 per cent of funds budgeted for project land aquisition and
resettlement assistance, either by production of falsified documents
showing higher amounts than actually paid or by use of "middlemen"
to aquire land at a low price for resale to GOI at inflated values.
Local governments agree undertake much of the land aquisition
for central agency projects, only because of the potential for
diversion.

 All contractors, suppliers and consultants
pay sponsoring agency to be pre-qualified, then pay for place
on shortlist of invited bidders (variable, typically <1per
cent of project value)

 Invited bidders frequently form an
arisan (collusion among bidders with predetermined winner who
will pay 1-2 per cent to each unsuccessful firm for submission
of losing bids) at the suggestion of agency staff or contractors'
associationGAPINSI for civil works(or both). In
a typical shortlist of 4-6 firms, payments to arisan members would
total 3-1 0 per cent plus GAPINSI fee (2-5 per cent) plus a payment
to members of the tender committee (3-7 per cent).

 Payments to contract signatory and/or
GOI project manager, (pimpro) at the time of final award and contract
signing (this is the single most variable element the "game"
with reports ranging from 0 per centfor international advisors
in several acenciesto 35 per cent or more of contract value
in local construction/consulting contracts awarded by some local
units. MPW and other central ministries have attempted to limit/control
these payments with reported averages of 7-12 per cent for international
firms (often paid through local partners) and 12-20 per cent for
domestic firms contracts or share of joint ventures; averaging
15 per cent of budget)

 Commissions to KPKN or other disbursement
unit for payment of invoices (0.5-2 per cent)

 Political contributions and other
demands by sponsor and/or GAPINSI (highly variable, but reports
indicate many contractors were required to contribute 10 per cent
to GOLKAR via GAPINSI within the past year, in addition to demands
by local officials; perhaps 2-15 per cent)

 Business tax collectors are almost
always willing to negotiate the tax bill (no net cost to contractor,
but loss to GOI revenue of as much as 50-70 per cent of amounts
due) Audits and Inspections

 Staff of BPKP and ministerial or
provincial inspectorates are almost uniformly reported to be seeking
to find issues or mistakes" in project implementation which
can be fixed" or ignored in final audit/inspection documents
for a fee (variable, from near 0 per cent to 10 per cent)

 Where prefinance funds have been
advanced to implementing unit, delays sometimes are the result
of Pimpro wishing to collect interest on deposited funds (GOI
system very poor in capturing/reporting such project level income
or earnings)

 Substitution of lower quality materials
is also a serious problem, but often specifications are not sufficiently
tight to allow proper enforcement; bills of quantity are also
inflated.

 Unit prices/billing rates are typically
based on recent contract values which include margins for "average"
levels of payments as noted above; thus diversion is included.

Classification of GOI Implementing Units by
Estimated Magnitude of Development Budget Diversion

Several potential actions could be taken by
the Bank to further enhance the transparency of our procurement
processes. However, essentially none of the action options are
viable without the full and active cooperation of GOI at very
senior levels. The following may, thus, be best viewed as a discussion
agenda for exploring with key GOI officials the steps which they
may regard as politically and practically feasible for the near-
and medium-term enhancement of our mutual procurement transparency.

1. Significantly tighten/restructure prequalification
procedures for contractors and consultants wishing to participate
in Bank-financed projects. In the view of many RSI staff and other
participants in Bank projects, the single most important reform
or strengthening of our procurement processes would be the serious
application of stringent prequalification requirements to assure
that only professional, capable bidders can respond to Bank-financed
tenders for goods, works and services. This would require only
that GOI enforce the prequalification regulations already in place
for each implementing agency, although we could offer some suggestions
for refining/improving the criteria for assessing and checking
the potential contractor/consultant's prior experience claimed
(see further on this point below). However, this would imply a
major departure from current practice by nearly all GOI offices
where now essentially anyone can be listed as a qualified contractor
or supplier of any type of goods or works for which the applicant
is willing to pay the registration fee. The prequalification process
for domestic tenders is largely viewed as a revenue-generation
process, rather than a serious screening of the quality of potential
contractors. Even for consulting services where shortlists are
generally developed for each potential assignment, most implementing
agencies regard places on the shortlist as a commercial asset
to be sold to the highest bidder with only minimal regard to the
actual qualifications of potential consultant organizations. Three
(3) additional steps could also be taken to assure the quality
of potential contractors, suppliers and consultants for Bank-financed
project implementation, as follows:

a. Develop procedures to identify firms owned/controlled
by GOI officials or their family members at all levels of government,
and proide all Bank project implementing agencies with a "negative
list" of such firms not eligible to participate in the procurement
process. This would obviously be a difficult and sensitive matter
which would also require substantial continuous effort to keep
updated, but may help to avoid many of the most serious distortions
of the procurement process.

b. Place on the "negative list"
for Ban-financed procurements all GOI-owned or sponsored firms
(eg the MPW Karya" contractors and consultant firms, DKI?s
partial ownership of Pembangunan Jaya, firms affiliated with BPPT,
etc) Again, this would be a very contentious matter with the GOI
agencies involved, but would remove the source of some significant
past distortions in our procurement process.

c. Expand outreach and information activities,
and streamline the procedures for international contractors, suppliers,
and consultants to prequalify and participate in Bank-GOI tenders
by all implementing agencies (perhaps including a "one-stop"
prequalification clearinghouse (at EKKUWASBANG?) for international
firms to register their capabilities and routinely receive notification
of all tenders by any GOI implementing unit in their fields of
qualification) to intensify competition. While the Bank could
assist in the development of such procedures, it is quite likely
that bilateral assistance, professional organizations and others
would be quick to respond if GOI announced its intentions and
requested assistance in this regard.

2. Advise GOI that the Bank will not routinely-finance
works tendered as "reserved-for economically weak contractors"
(typically Class C Qf the standard GOI prequalification system).
These small contracts with weak contractors have been one of the
most consistently problematic areas of the Bank's implementation
portfolio. To the extent practical within each project, implementing
agencies should be required to package civil works and gods into
tender packages large enough to attract the more capable Class
A and B contractors, with Bank financing offered for smaller packages
only on an exceptional basis. (Note: Many GOI units also use this
provision to limit potential contractors and suppliers to "pribumi"-owned
business, excluding firms owned by Chinese Indonesians; this practice
cannot continue to be condoned by the Bank.)

3. Modify composition and role of the tender
committee to include independent members drawn from the community
(local universities, targeted beneficiaries, NGOs or other appropriate
project participants), perhaps even as a majority of membership,
and expand the role of the committee to include all tender steps
from contract package definition, through distribution of documents
and evaluation of bids, to award and contract signing. The details
of such a major modification to GOI tendering process would require
serious discussion with GOI but could result in significantly
changing the current decision-making structure. The key would
lie with having truly objective and independent members appointed
to the committee, which raises the obvious question of who would
make the appointments. Would the Bank wish to have NOL review
of the membership? The GOI would surely object.

4. Require wide-circulation newspaper advertising
of all tender opportunities, provision of tender documents to
all interested parties, and evaluation of all bids received from
any qualified contractor/supplier (ie eliminate the common practice
of restricting tenders to an invited shortlist of prequalified
firms). This should produce a larger number of bids for each potential
contract, which would clearly complicate the work of the tender
committee, requiring additional time and budget for their work
(the reason most commonly given for restricting the tender to
invited firms).

5. Remove the contractors? association (GAPENSI)
from any role in the tender process and agressively discourage
theformation of contractors cartels (arisan ).

Current practices of posting tender announcements
at GAPENSI offices as a primary form of tender advertising and
consulting GAPENSI regarding the listing of invited tender participants,
simply encourages the formation of "arisan" to rotate
awards of contracts among a fixed set of firms, thus circumventing
the intended open competition and allowing price-fixing to become
commonplace. GAPENSI is also reported to be a primary mechanism
of contractors' inappropriate access to budget and owner estimates.
While the potential usefulness of GAPENSI in the prequalification
process for civil works contractors is obvious, extending their
(informal) role into the tendering process is clearly a serious
problem to be addressed. The linkage of GAPENSI to the political
system cannot be ignored, nor can the influence of GAPENSI on
key appointments.

6. Insert the newly developed Bank anti-corruption
clauses in all Bank-financed tender documents and open a confidential
channel for reporting violations of tender procedures to the Bank-GOI
prior to the award of contracts. Too frequently the Bank hears
of alleged irregularities only after contracts have long-since
been awarded and construction or other services performed, when
our range of potential action is limited.

1. Based on intensive consultation with
very senior GOI officials, develop an agreed anti-corruption action
plan (ACAP) along the lines suggested in the Bank HQ Working Group
report entitled "Helping Countries Combat Corruption: The
Role of the World Bank Group". Such an action plan could
include agreed initiatives from the menu noted below, as well
as initiatives already underway by GOI and further ideas arising
from our dialogue.

2. Particularly in light of the need to
bring "on budget" at least parts of the informal remuneration
now being paid to civil servants from the proceeds of the budget
diversions, and the potential macroeconomic benefits of improved
systems of governance, we may wish to use the possibility of Governance
Improvement Adjustment Loan to focus the required attention of
senior GOI policy-makers. Such an adjustment program could include
broader civil service reforms and streamlining of GOI structure
and procedures, in addition to implementation of the ACAP. I suspect
that having a possible $400-500 million (or more) in play may
focus their attention on real action options, more than a CPPR-type
discussion of problems and actions. Such an adjustment operation
could also explicitly support the accelerated privatization of
additional BUMNs and BUMDs/PDAM including at local level markets,
slaughterhouses, transport terminals, et al.

3. Implement an aureed tightening of Bank-GOI
procurement processes, along the lines of the separate note on
options for this tightening. However, for "problem units"
(ie where diversion is known/suspected to be particularly high),
including-the entire system of provincial and local governments,
we have the option of requiring all procurement for Bank-financed
contracts be handled by an independent Provincial/Regional Procurement
Board to conduct prequaliflcation, tendering and bid evaluation
in lieu of the normal tender committee. (Nothing in KEPRES 16
appears to forbid this as the Board could be designated by the
implementing unit, as long as normal signature authorities were
maintained.) Membership of the Board would be agreed between GOI
and the Bank to include appropriate technical and community members.

4. Agree to finance realistic salary incentives/honoraria
for staff of Bank project implementation units and appropriate
operating budgets for the projects following the example of Bank
health sector projects here (and many other projects worldwide),
and encourage GOI and other donors to do the same. This would
limit the budgetary impact of formally increasing compensation
to only those civil servants working on development projects.
(We could discuss broadening this principle with MenPAN.) However,
the Bank could/should insist this be coupled with an announced
and serious policy of zero tolerance for diversion of contract
funds and serious penalties for any offenders.

5. Current unit prices/billing rates for
essentially all goods, works and services procured by GOI include
varying degrees of mark-up for diversion, as nearly all such prices
are established from "standard unit prices" (as for
MPW averaging recent contracts) or other measures of "current
market prices". Efforts are underway (by Chitta B. and Frida)
to analyse the pricing differential bet-Aleen public and private
contracts for similiar works (Chitta), and between official versus
community-based contracting (Frida). The preliminary results of
these efforts seem to confirm mark-ups which average 15-40 per
cent, but showing quite a range of variation. International unit
rates in sectors such as power and telecoms tend to limit this
mark-up in the truly international ICB procurements. The Bank
and GOI could thus establish a baseline or "benchmark"
set of unit prices and billing rates for use in Bank projects
and require clear justification of any variance.

6. Tighter supervision of physical implementation
by both GOI and the Bank could reduce the instances of padded
bills of quantity (BoQ) in contracts, substitution of inferior
quality materials or equipment, improved quality of physical outputs
and "results on the ground" of Bank projects. Of course,
the budget and staffing implications of such increased supervision
would have to be assessed and apportioned between the Bank and
GOI, with perhaps the most convenient . but also the most expensive,
solution being the hirng of consultants mandated to perform the
increased supervision.

7. The use of "empowered engineers/consultants"
as contract managers is an option already in use by PLN and other
project agencies (and widely used in other countries), and which
has been agreed in principle with GOI at our most recent CPPR
discussions. Several major implementing agencies, including NTW,
seem to regard the empowering of "project engineers"
(usually foriegners) as a retrograde step to earlier operational
methods used by the Bank,, but discontinued in most sectors more
than IO years ago due to (supposedly) growing in-house capacities
in implementing units. Having such empowered consultants could
be undertaken in conjunction with or separately from the independent
procurement board noted in para 3 above, but if both are done
it has the effect of taking control of the project (except contract
signature) away from the GOI implementing unit, and would certainly
raise serious objections.

8. Mechanisms to increase public information
and facilitate public involvement are being tried in several Bank
projects, perhaps most notably in the VIP program where public
information boards displaying project location, design and costs
are posted in each project community, together with telephone
number and other instructions for submitting comments, questions
or complaints. Many RSI staff commenting on the issue have suggested
increased transparency and encouragement of public monitoring/comment
as an important mechanism we could use to better assure contractor
performance and results. Project or RSI "hotlines" or
comment/complaint mailboxes were also suggested to assure that
the public or project staff could provide information while maintaining
anonymity.

9. From the perspective of the Bank's fiduciary
responsibilities, perhaps the most blatant and serious issue for
immediate attention is improvement in the quality and accuracy
of project financial audits now conducted for most projects by
BPKP.

Most GOI project officers report visits by BPKP
staff result in demands for payments in return for a "clean"
(ie unqualified) audit of their accounts. In summary, the audit
results on which the Bank relies for satisfying our Judiciary
responsibilities are for sale! There are really only two basic
options: attempt to fix the problems at BPYP to produce the accurate,
independent audits required by our loan agreements, or find other
(commercial) auditors who can do the job. We must decide if we
believe BPKP is "fixable" and if so quickly proceed
with a loan (along the lines of the recent BPK project, but much
stronger) to address the problems and produce reliable audit reports.
Otherwise, we must convince GOI to retain commercial auditors,
which they have consistently refused for more than 20 years (it
may require a serious threat to suspend lending, if we mean it).
Expansion of our audit coverage to include contractors books is
also an option posed by some staff members and the HQ working
group on corruption; but, the obvious question quickly becomes:
who would pay for such audits and to whom would the auditors report?

10. Curtail Bank financing of "soft"
expenditures such as TA, consultancies, training, travel and other
project cost which are easv to falsify and difficult to audit.
While many Bank staff correctly assert that much of the long-term
impact of our projects comes from the intangible or "soft"
activities which focus on capacity-building, transfer of knowledge
and overcoming skills shortfalls, as well as inadequate routine
budget allocations, it is also undeniable that these activities
have suffered from some of the most serious cases of diversions
and fraud encountered by our projects. Tightening supervision,
better Terms of Reference, improved documentation and payment
based on performance/outcome have all been suggested as partial
remedies applicable to some Bank projects and these have been
generally discussed in recent CPPR meetings. However, the problem
is significant enough to deserve a place on the agenda for policy
discussions with GOI.

11. Continued improvement in GOI-Bank procedures
for land aquisition and resettlement, focusing both on assuring
adequate budgets and actual payments to the affected persons.
As noted in the problem statement, even when adequate funds are
budgeted, "leakage" in the process of land aquisition
and resettlement compensation remains a serious issue in many
cases. Establishing a special GOI commission for land issues (along
the lines of the human rights commission) is an option which could
be explored, but no one on the GOI side has even hinted. that
it may be acceptable.

12. Finally, and perhaps most basically,
there is a clear feeling from the staff that such issues have
not received Bank management attention until recently and some
uncertainty as to feasibility of pursuing this agenda with GOI,
especially now in the run-up to the Presidential election in March.
However, there is broad concensus among the staff that "the
problem starts at the top" and there is a sincere willingness
(even eagerness by some) to support Bank efforts to escalate dialogue
on these issues to the highest possible levels in GOI in our attempt
to produce a meaningful program of action.